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> Posted by Jeffrey Riecke, Senior Specialist, CFI

Never before have issues of data privacy and security been more top of mind. In the United States this attention was on full display a few weeks ago when every media outlet was glued to Facebook’s CEO Mark Zuckerberg as he fielded questions from Congress on how his company handles, and has mishandled, user data.

Europe begins a new era for data protection today as the General Data Protection Regulation (GDPR) goes into effect, following its passage roughly two years ago. The law is being celebrated widely for its robust customer-centricity. The degree to which it succeeds, in Europe and globally, in enforcing a business environment that provides adequate safeguards for consumer data management remains to be seen. One thing is certain, however: it has the potential to change the way we all interact with businesses, from internet platforms to banks.

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> Posted by Tess Johnson, Research Associate, CFI

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Building upon its e-commerce features for businesses, Instagram recently took another step into the digital finance space by rolling out a native (or in-app) payments feature to some of its users. After registering a debit or credit card and creating a security PIN number, users can make payments to a limited number of vendors directly within the Instagram app without being redirected to an external website. Beyond making your impulse buys a much more seamless experience, this native payments functionality can help online retailers and others sell and market their products directly to consumers without needing to build their own website or manage a physical retail location.

Given the intense scrutiny of Facebook’s data protection and privacy policies in recent weeks, it remains to be seen whether large numbers of users and businesses will actually entrust their financial data to Instagram, as, after all, Instagram is owned by Facebook. Instagram’s new payments feature is backed by Facebook’s Terms of Service for payments. However, with the volume of traffic that the platform generates for businesses and the ever-increasing smartphone ownership worldwide, adding this functionality is perhaps an opportunity that’s too good for Instagram to miss. It’s reported that 60 percent of Instagram users learn about new products through the platform, and over 200 million people visit at least one business profile on Instagram daily.

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Which topics would you most want to see researched?

> Posted by Sonja E. Kelly, Director of Research, CFI

Hi there. I would love your help as we select topics for our 2018 CFI Fellows research.

CFI is getting ready to launch the request for proposals for our 2018 Fellows cohort (a lot of you have been asking when it’s coming out, and the answer is SOON!). The CFI Fellows Program is designed to respond to questions we think are critical to the future of financial inclusion. Fellows come from many perspectives, including both relatively junior and senior well-known researchers, and including researchers who have been in the financial inclusion community for a long time and some who are perceptive outsiders. We share a set of topics for study, and ask interested researchers to submit research proposals that address the topic of their interest.

Our semi-final list of questions is long, and we ask for your help refining or prioritizing them – or adding new ones. We’ve enabled comments at the bottom of this post for your feedback. Alternatively, feel free to email me at skelly@accion.org.

Here are the questions we are currently considering:
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It’s not just social media. We need a fresh look at how financial data is protected, too.

> Posted by Elisabeth Rhyne, Managing Director, CFI

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Mark Zuckerberg defended Facebook’s handling of customer data yesterday before the U.S. Senate, and many of us at Accion and the Center for Financial Inclusion were riveted. Not that the testimony was especially compelling as television spectacle, but because the issues at stake are so important both for our own lives and for our work.

I did a quick scan of the staff here in our Washington, D.C. office, and would like to share some of their thoughts.

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A breakdown on gender diversity in the digital currency industry

> Posted by Jeffrey Riecke, Senior Specialist, Center for Financial Inclusion at Accion

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Is cryptocurrency a household word now? How about blockchain or Bitcoin? You don’t have to be immersed in financial services to regularly hear about the soaring values of digital currencies, the launch of new products and systems, and other industry developments. Just last week, for example, the Government of Venezuela announced that it was launching a national cryptocurrency backed by its petrol supply. Switzerland is doing the same. And they’re only two of a growing list of countries actively exploring alternative digital currencies.

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What the FCC’s net neutrality vote means for financial inclusion, fintech startups

> Posted by Elisabeth Rhyne and Vikas Raj, Managing Director of the Center for Financial Inclusion at Accion and Managing Director of Accion Venture Lab

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In a landmark ruling yesterday, the U.S. Federal Communications Commission (FCC), led by Chairman Ajit Pai, voted to end net neutrality — the requirement for internet service providers to treat all the content they carry equally regarding access, price, and speed/quality of delivery. This decision, overturning Obama-era internet regulations, is a big deal and may shape the way Americans experience the internet in the future.

It could have significant implications for financial inclusion, too.

Under the new ruling from the FCC, internet service providers (ISPs) may give preferential treatment to content from applications they favor — unlimited access, differential pricing, or faster/better download speeds — while slowing or even blocking other applications.

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> Posted by Center Staff

ICICI Bank and Stellar: A look at a transaction enabled by blockchain (click to enlarge)

Why are mainstream financial institutions and fintechs partnering to pursue financial inclusion? In the case of ICICI Bank and Stellar, it’s because combining forces enables them to reach clients with a free blockchain-backed mobile wallet that they could not sustainably offer on their own.

Last week we released a new joint report with the Institute of International Finance (IIF), How Financial Institutions and Fintechs Are Partnering for Inclusion: Lessons from the Frontlines. As part of the report, CFI and IIF conducted in-depth interviews with over 30 industry participants. We discovered dozens of partnerships between mainstream financial institutions and fintechs in emerging markets, and we detailed the workings of 14 of them.

The story of ICICI Bank and Stellar began when an ICICI Bank senior executive read a book about new technologies. The book mentioned a blockchain company in Silicon Valley called Stellar. Fast forward to today, Stellar now provides ICICI Bank with an open-source online ledger, or blockchain, designed to oversee the movement of money. ICICI Bank customers in India and abroad can transfer money through a free mobile wallet over Stellar’s platform. These transfers are made in real fiat currency, but internally they are documented in cryptocurrency. While the transfers are recorded on Stellar’s ledger in a cryptocurrency called ‘lumens,’ ICICI Bank holds the value for these transactions in Indian rupees in a pooled account. Due to the open nature of Stellar’s platform, ICICI Bank customers can transfer money to customers at any other bank on the platform. Stellar’s open platform has allowed ICICI Bank to easily connect with financial institutions that it might not have connected with otherwise.

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> Posted by Sonja Kelly, Director of Research, CFI

WeBank started piloting facial recognition for KYC (“know your customer”—verifying that a customer is who they say they are) last year—we heard about it when we talked with Jared Shu, a partner with McKinsey, as part of our deep dive about the different ways banks pursue financial inclusion. At that point, the technology was mere possibility, with some question about whether the regulator would allow it. Now, it seems, facial recognition is indeed serving as a form of identity in China. With the help of technology, customers can quite literally authorize a transaction using their face.

Alipay, a mobile payment app launched by Alibaba in 2004 and used by 120 million people in China, is partnering with Face++ (pronounced “face plus plus”) to allow people to use their face as a credential to make payments. The technology is a natural extension of using a fingerprint to verify a person’s identity, and it is far more secure than just comparing a signature on the back of a credit card to a signature on a receipt.

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> Posted by Elisabeth Rhyne, Managing Director, CFI

Internet privacy rules have just been overturned in the U.S. by Congress and the Administration, and at the same time, struggles over banking privacy are taking place. There are striking similarities as well as crucial differences. As a consumer protection advocate, I am struck by how the narrative about these kinds of conflicts primarily centers on where competitive advantage lies, and which company or industry is made the winner or loser, rather than about the rights of consumers.

The internet case pits telecoms and cable companies, like AT&T, Verizon and Comcast, against internet companies, like Google and Facebook. The Obama-era rules that were just overturned required broadband providers to ask customer permission before tracking, sharing and/or selling their data. These companies complain that the rules disadvantage them relative to internet-based companies, which can collect data without such rules.

The banking case, as reported in The New York Times, pits major banks against fintechs and data aggregators. The question is whether banks will transfer consumer data – at the consumer’s request – to companies that provide personal financial management tools, like Mint, Betterment, and Digit (or to data aggregators that facilitate the transfer – like Plaid and Yodlee). Without this data the financial management apps cannot build the complete portrait of a person’s financial life they need to provide analysis and advice. But banks are reluctant, even after specific consumer requests. You might think this reluctance is to protect their customers or because of data privacy rules for banking, but actually, according to The Times, it’s because the customer data reveals details about banks’ own business models – like pricing and products. The banks fear, probably correctly, that the personal financial management companies will use the information to undercut bank products with their own offerings.

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> Posted by Kim Wilson

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Predictably, the long tentacles of financial inclusion have coiled themselves around the most vulnerable targets of humanitarian aid: low income refugees, migrants and displaced populations (hereon: “refugees”).

Just as predictably, the financial inclusion agenda is driven by suppliers (aid providers, donors, financial intermediaries and governments). Few refugees are demanding to be included in a digital/formal ecosystem. That does not mean they don’t appreciate the shelter, food and cash that humanitarian agencies have mustered on their behalf. They do. They also appreciate the efforts of those same agencies to make cash assistance easier. E-cash that can be transformed into physical cash at convenient times and places is an example. Use of debit cards at ATMs to withdraw cash from digital accounts can cut valuable time otherwise spent waiting in long cash distribution queues. Very appreciated, indeed.

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The views and opinions expressed on this blog, except where otherwise noted, are those of the authors and guest bloggers and do not necessarily reflect the views of the Center for Financial Inclusion or its affiliates.